How Coronavirus is affecting demand on Amazon in the UK – March 2020 Overview

Coronavirus
has shifted consumer behaviour dramatically over the last few weeks. With more bricks
and mortar stores closing and social measures taking place online shopping for all
products is becoming the norm. And while a lot of retailers are still re-working
their supply chains and distribution to cope with the significant surge in
online demand, Amazon is already able to cater for this demand across pretty
much majority of product categories. For Amazon, the corona
crisis is an opportunity to further expand its already dominant market position
as a primary online marketplace.

It is not surprising then that since the quarantines and social distancing measures started across Europe, we’ve seen a continuous growth in audiences going to Amazon. As seen from the graph below the significant jump in searches for Amazon are aligning with the start of the quarantine in Italy (9th March) and Spain (15th March). We expect these trends to continue as more measures are put in place in limiting people’s access to goods in bricks and mortar stores.

How
has the Coronavirus affected UK Amazon demand?

Masks,
disinfectants, medicine and fresh food sales are booming on Amazon. We’ve seen
that in the first week of March, of the top 100 search queries on Amazon, 52% were
related to Masks and Sanitisers while in comparison with the same period last
year 44% were focused on Consumer Tech. Moreover some 66% of the top 1000
queries this year are different from the same time last year, showing the scale
of change in terms of customer demand.

Aside
from Covid-19 necessities and essentials, we’ve seen several categories grow
significantly showing large demand opportunities for brands.

We
analysed the top 1000 searches on Amazon UK to see what trends are emerging
across categories. We’ve seen that the demand for hygiene products, household
essential and medicine has completely distorted the normal consumer pattern. On
the graph below you can see a comparison YoY for the change in the number of
search terms within each category. The orange bar below shows loss in search
terms vs LY and the green shows gain.

What is surprising is Fitness & Exercise is down based on number of search terms, however from sales data we know this category is doing extremely well. One of the reasons for this could be stock issues whereby there is not availability to make a purchase leading to fewer searches for these products as well as the data based on the start of March whereby the country was not completely quarantined yet.

If we exclude household essentials, masks and hygiene products, we can see a clearer picture of how the rest of the market is performing. There are big gains for Pet Care, Beauty, Toys & Games and Consumer Tech that gives us an indication what consumers are shopping for. We’ve seen 5 categories with an especially strong increase: Petcare (81% YoY), Alcohol (298%), Adult & Sex Toys (46%), Beauty (53%).

Unsurprisingly
the category which has been hit the worst from the Covid-19 crisis has been
Fashion and Accessories, with more people staying at home and not planning for
holidays or social gatherings in the near future.

Category
Deep Dive: Toys

With
more people having to work from home and tend to their children at the same
time, we’ve seen a surge in search queries relating to toys and board games.

Nearly
all type of toy & games-related search terms have seen a gain in terms of
search frequency. We have seen also significant increases in adult game search
terms, with the search term “board game adult” jumping to top 2000 search terms
vs last year when it was not appearing even in the first 255k terms. Same
applies to different types of family and drinking games. As we’ve seen video
conference socialising and parties have started becoming the new way people
connect and this is going to create also new opportunity for group games online
despite the quarantines.

An
interesting trend is the increase in learning and educational games searches,
with brands such Orchard Games starting to appear in the top 3000 searches which
is a significant jump considering that these independent brand terms normally appear
past 100k rank in non-peak periods.

One
of the few Toy sub-categories which has been negatively affected has been
Travel and Outdoor toys which unsurprisingly may take some hit with focus
shifting towards indoor play.

Category
Deep Dive: Petcare

As
shopping is becoming more restrictive and people are encouraged to minimise
unessential trips, customers naturally shift purchasing priorities on heavy
items such as pet food with preference towards home delivery vs in-store
purchases. This leads to a strong surge in all food-related search terms. In addition,
with people having more time to spend with their pets at home, items such as
treats, toys and bath products have increased in demand.

We
are seeing very strong increase in frequency for cat products with “cat litter”
and “scratching post” both ranking within the top 400 search terms on Amazon.

Again,
following the trends, the only types of search terms that have decreased in
terms of average rank are outdoor related items such as harnesses, leads and
collars.

Category
Deep Dive: Beauty

Beauty
is another category which has seen strong gains particularly when it comes to Skin
and Body care. Products such as face creams, serums and facial tools are seeing
increase in demand. Same applies to “feel-good” categories, such as bath bombs
and bath products as people are looking to pamper themselves.

Surprisingly
some categories which may intuitively seem should be seeing a sharp decrease
have not been hit and we are still seeing strong demand for items such as fake
tan, make up and perfume. This could be due to the increase in video and online
communication as well as the psychological factor of customers aiming to find ways
to feel better.

How
should manufacturers deal with the changing landscape in the best possible way
to emerge as winners?

The
current situation poses both a challenge for some categories but also a vast
opportunity for others with the increase demand and shift in online spending.

Brands
in the above-mentioned categories can find a long-term online customer even
past the quarantine if they are able to answer the demand and provide the right
customer journey. As competition within these categories increases, the use of well-structured
and targeted advertising as well as optimised product listings will be decisive
factors on whether brands maximise their growth potential within the channel.
Another key factor in winning in this environment will be the use of insight
and data to understand how customer demand changes on daily basis and how
audiences search for each brand’s products and what features they find
important in the selection.

Brands
making decisive steps to building their presence on Amazon by using data-led
strategy will see both short- and long- term growth acquiring loyal customers
and gaining market share vs competitors.